Telcos bet biz model on TV

About 100 or so small to mid-sized phone companies across the country have deployed some form of IPTV service--mostly for self-preservation. Here's a brief perspective from four telco executives:

"We're trying to make our access line service more sticky. That's why we did it," said Phil Erli, executive vice president of Ringgold Telephone Co. of Ringgold, Ga. Ringgold has 23,000 access lines and 4,600 DSL subscribers. IPTV was launched there three years ago and now has 2,000 subscribers. "I won't say it worked. We've lost about 10 percent of our base since we went into this business. It's certainly different than being a wireline telephone company. It's made us be creative."

Keith Galitz is in the same game, as president of Canby Telecom, a local phone company in Canby, Ore., with 10,700 access lines and 52 percent penetration for DSL lines. Canby launched an MPEG-2 IPTV operation two years ago that now has 1,055 subscribers. "It's a question of whether you would have lost 10 percent or 40 percent without it," Galitz said. "It's really about the bundle."

West Kentucky Rural Telephone south of St. Louis recently deployed IP-Prime, and had 250 takers before the official launch. "Ten years ago, we had a video service, and the only calls we got was when it went out," said West Kentucky chief Trevor Bonstetter. "My wife asked me if we were crazy when we went in again a year ago. Every day now I get up and call and check. How many problems did we have last night? Did we have glitches? Did boxes freeze up? I didn't do that for 10 years. That's the challenge we have with bleeding edge technology."

Surewest of Sacramento, Calif., was one of the first telcos out with IPTV, in early 2004, and the first to offer HD in 2005. Surewest comprises a traditional ILEC with 125,000 access lines and a CLEC in which fiber deployment started five years ago. "IPTV allows us to leapfrog typical TV capabilities," said Surewest Senior Vice President and Chief Technology Officer Bill DeMuth. "With it comes all the headaches we've been talking about."

As with West Kentucky, TV isn't entirely new for telephone companies, but most had a cable infrastructure. IPTV requires an entirely new platform and the skills inherent in a technology shift.

"We've had to learn to be a lot more self-sufficient," Erli said. "We've had to learn to do things, to make things work. We use ADSL2-plus. We had to figure out ways to go to a customers house and make that work. We had to be more innovative. Whether IPTV is the right example, it's IP, which we all believe it going to be the wave of the future."

Bonstetter recalled hooking up DMS switches as a consultant for Nortel early in his career. "I was hired at my first co-op to go build their networks. They had one digital switch, and the rest was analog. It was a big step from analog to digital, and now from digital to an IP network. That's a cultural task."

The staff had been maintaining the telephone network "one way for years and years," he said. "We've started giving bonuses to staff when they go through 10 weeks of IP training, from the person who answers the phone to the person who gets on the computer at the house," he said. "I took it."

Next week, FierceIPTV will relate the obstacles, frustrations and the ultimate goals for these four innovators in IPTV. As always, send your thoughts and feedback to [email protected]